How to devise a Christmas incentives strategy

A combination of factors may be keeping Christmas incentive programmes at the bottom of employers’ agendas, despite the festive season being only three months away.

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Employers are becoming more comfortable about investing in Christmas incentive programmes.

Many organisations have had to delay their plans because of unfinished workloads from the first half of the year.

Retail vouchers, particularly for supermarkets, remain the most popular Christmas incentive.

Reasons include a lack of resources, such as staffing and budget, and, consequently, reward teams trying to catch up with unfinished workloads from the first half of the year.

Bill Alexander, managing director at experience day provider Red Letter Days, believes just 25% of employers have a comprehensive approach to Christmas incentive programmes, with call centres and organisations operating in multiple locations being particularly savvy about the value of incentives. “They know they need to deliver excellent customer service to retain clients,” he says.

Internal research by Asperity Employee Benefits into the reasons why employers implement its incentive programmes uncovered several basic drivers. Alex Bailey, marketing manager at Asperity, says: “They are all related to boosting engagement, but we’ve got things like [employers wanting to] become an employer of choice, while some [employers] use our programme as a differentiator against other similar [organisations] operating in the same sector, as a perk for employees that their competitors don’t have, as well as when [employers] are doing well and want to say thank-you to staff.

“The third reason is when [employers] have not been able to give [employees] a pay rise for some time and want to give a substitute for salary.”

An organisation’s size typically determines its strategy. Large employers typically have a more structured approach to Christmas strategies and go to market with a tender for the business to see what is available. “Whereas the sort of thing a small or medium-sized enterprise (SME) would do is issue hampers and get staff merry during the Christmas party, which is always a good strategy,” Mike Morgan, chief executive officer at reward, incentive and employee benefit programme provider People Value.

About half of the 40 blue-chip employers that People Value works with run some sort of incentive or reward programme at Christmas, with the minimum being a party, says Morgan.

Growing confidence

A recent resurgence in employer interest in Christmas parties can be attributed to growing confidence in the UK economy, says Tim Stevens, managing director at corporate catering and event planning provider Best Parties Ever.

“More so this year than at any time since the credit crunch, employers seem to be feeling more free to have a party without thinking it is sending the wrong messages to shareholders or staff whose colleagues have been made redundant,” he says. “Two years ago in particular, and last year to an extent, there was a feeling that a party was a frivolous way to spend money, but now it seems that suddenly it’s OK to have a party.

“There’s a return to the feeling that it’s good for morale and good for teamwork, and that rewarding employees is OK again.”

Retail vouchers

But retail vouchers remain the most popular seasonal reward. Asperity’s Bailey says: “For us, supermarket savings are probably the most popular because they provide everyday savings to employees with not much money, on the minimum wage.”

Vouchers for supermarket chains Asda and Sainsbury’s are currently the most popular among the employers Asperity works with.

Kuljit Kaur, head of business development at P&MM Employee Benefits, says vouchers for high-street clothing shops and eateries are also popular, as are experience days.

P&MM’s Treat Me product, launched in November 2012, offers employers events and experiences to offer staff instead of, or alongside, high-street vouchers. “These are popular because they are not traditional high-street [incentives], which are something to help [employees] in the tough climate,” says Kaur.

“An event and experience [voucher] is very much above and beyond recognition products because it can’t be spent on everyday necessities that get lost [in employees’ memories]. An event or experience is going to stick in their mind for a lot longer.”

Holiday trading, which allows employees to buy and sell holiday, is one of the latest incentives to be offered by Asperity. “Christmas is a time when staff take lots of holiday, so they might want to buy more at that time,” says Bailey. “It’s just something extra and different to engage staff.”

Determine objectives

Employers keen to implement a Christmas incentives programme should first determine their objectives, and whether they want a short-term programme offering a one-off reward, such as a hamper, or a long-term scheme designed to engage and motivate employees throughout the year.

Employers should also decide whether Christmas is the right time to launch a new incentives programme. Martin Alden, head of B2B and partnerships at Wickes, says: “While many businesses focus on incentivising to drive activity in the run-up to Christmas, the New Year can also be key time as it helps to extend the goodwill of the festive season and kick-start the year.

“A reward or piece of recognition can provide an immediate boost to morale as well as focusing staff on targets and activity for the year ahead. It can help to boost engagement in the face of January blues and, depending on the reward, ease the post-Christmas squeeze on spending.”

Alden says employers also need to be mindful of incentive choice. “It is essential for businesses to give their staff a wide variety of motivational rewards to choose from that reflect all aspects of their life, both in and out of work,” he says.

“Choice ensures a broad appeal across all demographics of a business. After all, what suits a young graduate may not appeal to an older member of the workforce.”

Incentive choice should be broad and tailored to an employer’s staff demographic, perhaps based on a budget of about £10 to £20 per employee, and should be fun.

“Look at Christmas and retention and recruitment [opportunities],” says Red Letter Days’ Alexander. “An incentives programme is a strategy piece: employers can take an annual campaign and have fun with it. Christmas tends to be a time when employees stretch for year-end targets, but it’s also when they are looking for support to do their own shopping and have fun.”

But employers should only consider introducing a new incentive programme if they have the time to devote to a successful implementation strategy.

P&MM’s Kaur says: “An employer that is really serious about having a long-term plan should allow six months, but a reactionary plan can be implemented in two to three weeks.

“If an employer is going to do it, it should take the time to make a fuss. Think about the letter that’s going to go with it, think about the packaging that’s going to go with it and think about the little details, because it’s those little details that will take it so much further. That little bit of pre-thought will just make that thank-you seem so much more special.”

Alexander says line managers can help to communicate a Christmas incentives strategy to ensure employees understand it is for Christmas, and to make it feel special.

But he adds: “Employers should get managers off their backsides to say ‘thank you’, not sitting behind their desks sending emails to people.”

Iain McMath: Top tips for a cost-efficient Christmas incentives strategy

For many employers, knowing what to offer staff as a reward at Christmas can be difficult. Traditional gifts often include food hampers, bottles of wine, or a simple cash bonus. However, with different employees likely to be motivated by different rewards, such options can fall flat.

When looking at Christmas incentive strategies, employers need to remember how diverse their workforce is and, consequently, what individuals would, or would not, appreciate as a gift. For example, a non-drinker may not appreciate a bottle of wine or champagne, and a vegetarian is likely to balk at a frozen turkey.

So the choice of gift is very important to consider. Multi-retailer shopping vouchers have proved very popular as a Christmas gift for employees in recent years. These vouchers allow staff to choose their own gifts, ranging from well-known fashion brands and luxury dining to experience days and the latest electrical goods. This way, employees can select a gift they really want, at a price that suits their employer’s budget.

Another way to keep costs down at Christmas is to manage employees’ expectations. By regularly incentivising and acknowledging staff achievements throughout the year, employees will not see Christmas as the only occasion to receive recognition from their employer.

As a result, instead of focusing on the monetary value of whatever gift they receive, employees will see it as just another example of how the organisation rewards strong performance, loyalty and consistency, not just at Christmas, but throughout the year.